141ST STREET CORPORATION, BY MARK HERSH, ETC., PETITIONER V. UNITED
STATES OF AMERICA
No. 90-781
In The Supreme Court Of The United States
October Term, 1990
On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Second Circuit
Brief For The United States In Opposition
TABLE OF CONTENTS
Questions Presented
Opinion below
Jurisdiction
Statement
Argument
Conclusion
OPINION BELOW
The opinion of the court of appeals (Pet. App. 5a-29a) is reported
at 911 F.2d 870.
JURISDICTION
The judgment of the court of appeals was filed on August 17, 1990.
The petition for a writ of certiorari was filed on November 15, 1990.
The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
QUESTIONS PRESENTED
1. Whether the district court erred in imputing to petitioner its
agent's knowledge of and consent to drug trafficking in petitioner's
apartment building.
2. Whether the jury at the trial to obtain forfeiture of
petitioner's property was properly instructed that petitioner was not
an innocent owner of the property unless petitioner could establish
that it had done all that reasonably could be expected to prevent the
illegal use of its property.
3. Whether due process required that petitioner receive notice of
and an opportunity to be heard prior to the government's seizure of
petitioner's apartment building.
STATEMENT
After a jury trial in the United States District Court for the
Southern District of New York, petitioner's property, a building on
West 141st Street in Manhattan, was ordered forfeited to the United
States. The court of appeals affirmed.
1. Between December 1986 and May 1988, New York City police
received numerous complaints of drug trafficking in petitioner's
41-unit apartment building located at 617 West 141st Street. /1/ The
complaints alleged that drug activity was taking place in 24
apartments on all six floors of the building. Pet. App. 7a-8a; Gov't
C.A. Br. 4. Five search warrants were executed at the building prior
to May 1988, and more than 20 arrests had occurred there. Gov't C.A.
Br. 4. Investigation of the building revealed that its common areas
were littered with crack vials and pipes, that lookouts constantly
were posted in front of the building, and that "steerers," who direct
drug buyers to sellers, loitered outside the building and in the
lobby. Pet. App. 8a.
In 1987, police officers repeatedly attempted to contact Mark
Hersh, petitioner's president and principal stockholder. Hersh failed
to respond to several telephone calls and to a letter asking him to
come to the local precinct house to discuss drug trafficking in the
building. Pet. App. 8a. Also during 1987, a police officer spoke to
Morris Nahmias, Hersh's uncle and the superintendent of the building,
about the drug trafficking there. Nahmias, who also acted as
petitioner's rental agent, rent collector, and corporate
representative, denied that any drug activity was occurring in the
building. Ibid.; Gov't C.A. Br. 7. On three occasions, the officer
asked Nahmias to tell Hersh to call the officer, but Hersh never
called the officer. Gov't C.A. Br. 7. One of the residents of the
building complained directly to Hersh about drug dealers on his floor.
Pet. App. 17a. Hersh also visited the building on more than 100
occasions between 1982 and 1988 and spoke with Nahmias on a weekly
basis. Ibid. Nahmias accepted bribes from drug traffickers to keep
the elevators in the building running in order to facilitate drug
trafficking, and he charged exorbitant rents to lease apartments
solely for the purpose of selling drugs. Id. at 16a.
When police officers began an investigation of drug trafficking in
the building in May 1988, they deliberately decided not to contact the
owners of the building. The officers concluded that, given the level
of drug activity at the building and the prior fruitless attempts to
contact Hersh, the owners were aware of the drug trafficking and were
possibly in league with the drug traffickers. Pet. App. 8a; Gov't
C.A. Br. 5.
In May and June 1988, undercover officers purchased crack cocaine
in several apartments in the building. During these purchases, the
officers learned that an alarm system designed to alert the occupants
of the apartments to police presence ran from a central connection box
on the roof to eight apartments in the building. Pet. App. 8a-9a. On
June 2, 1988, pursuant to a valid warrant, officers searched these
eight apartments, found a kilogram of crack cocaine, weapons, and
cash, and arrested 26 people. Two weeks later, after additional
undercover drug purchases, officers executed another warrant to search
nine more apartments in the building, and uncovered four pounds of
cocaine, cash, and weapons. Id. at 9a.
On June 24, the same day that the second search warrant was issued,
authorities obtained a warrant from a United States Magistrate to
seize the entire building and the leasehold interests of 15 people in
the building. Pet. App. 9a. On June 29, the government seized the
building, sealed 15 apartments, and arrested 12 persons. Ibid.
2. On July 7, 1988, the government filed a complaint seeking
forfeiture of the building pursuant to 21 U.S.C. 881(a)(7).
Petitioner filed a claim to the building, asserting that it was an
"innocent owner" within the meaning of Section 881(a)(7). Before
trial, the district court ruled that any knowledge of or consent to
illegal activity by Morris Nahmias in the building would be imputed to
petitioner, because Nahmias acted as petitioner's agent. Pet. App.
4a, 9a-10a. In the same order, the court denied as untimely a motion
by Stanley Weg, who claimed to be a shareholder in the corporation, to
intervene in the action. The court also noted that as a shareholder,
Weg had no standing to intervene in the forfeiture proceeding. Id. at
4a.
At trial, after hearing the government's evidence of drug
trafficking in the building, the court held that the government had
shown probable cause to believe that the building was used to
facilitate felony drug trafficking within the meaning of 21 U.S.C.
881(d). For this reason, the only issue submitted to the jury was
whether the narcotics trafficking in the building took place without
petitioner's knowledge or consent. Pet. App. 10a.
3. The court of appeals affirmed. Pet. App. 5a-29a. It first
ruled that the ex parte seizure of the building on June 29, 1988, did
not violate the Due Process Clause. Id. at 11a-15a. It found that
the government's interest in halting persistent drug dealing in the
building, when coupled with Hersh's failure to respond to police
inquiries, outweighed petitioner's interest in "ownership and
possession of an apartment building solely for commercial purposes."
Id. at 12a. The court also held that the district court had not erred
in imputing to petitioner Morris Nahmias's knowledge of and consent to
drug dealing in the building. Id. at 16a-17a.
The court next rejected petitioner's challenge to the district
court's jury instructions. It held that the district court properly
instructed the jury that petitioner could prevail either by showing
that it did not know of drug trafficking at the building or that it
did not consent to the drug trafficking. Pet. App. 17a-21a. In
addition, the court of appeals upheld the district court's instruction
that to show lack of consent, petitioner had to establish that once it
learned of illegal conduct, it had done all that it reasonably could
to prevent the illegal use of its premises. Id. at 21a-24a. /2/
ARGUMENT
1. Petitioner first contends that the district court erred in
imputing to petitioner its agent Nahmias's knowledge of or his consent
to drug trafficking in the building. Petitioner concedes that Nahmias
was its agent, but petitioner claims that Nahmias acted outside the
scope of his employment and adversely to petitioner's interests and
that, therefore, it should not have been held responsible for his
acts. Pet. 8-16. That fact-bound claim is without merit.
Under New York law, an agent's knowledge and actions are imputed to
his principal unless the agent has completely abandoned the
principal's purpose and acted entirely for his own or another's
purposes. See Prudential Bache Securities, Inc. v. Citibank, N.A., 73
N.Y.2d 263, 276, 536 N.E.2d 1118, 1125, 539 N.Y.S.2d 699, 706 (1989);
Center v. Hampton Affiliates Inc., 66 N.Y.2d 782, 785, 488 N.E.2d 828,
497 N.Y.S.2d 898, 900 (1985); In re Investors Funding Corp., 523 F.
Supp. 533, 541 (S.D.N.Y. 1980). Here, as the court of appeals held,
Nahmias's actions themselves were not adverse to petitioner. Nahmias
acted as petitioner's managing agent at the building. In that role,
he leased apartments and maintained the building. His involvement in
drug trafficking at the building came as part of his performance of
these duties. Pet. App. 7a-9a, 16a. In addition, Nahmias derived
considerable profit from his illegal activities, and petitioner put on
no evidence to discharge its burden of showing that it did not share
in these profits. Ibid. Moreover, even if Nahmias did not share his
excess profits with petitioner, his actions ensured that the
apartments in the building remained rented and that rentals continued
to flow to petitioner. Thus, he had not abandoned his role as
petitioner's agent.
In any event, the court of appeals correctly found that the
district court's imputation of Nahmias's actions to petitioner was of
no significance because the jury could have concluded that Hersh,
petitioner's president and principal stockholder, knew about the
extensive and persistent drug trafficking in the building, yet he
failed to take any action. Pet. App. 17a. Police officers repeatedly
left messages at Hersh's office sent Hersh a letter informing him of
the problem and asking for his assistance; a tenant of the building
complained to Hersh about drug dealing on his floor; and Hersh
personally visited the building frequently and therefore must have
seen the clear evidence of ongoing drug trafficking. Accordingly, the
jury had direct proof that Hersh knew and yet did nothing about the
drug trafficking at the building. Under these circumstances, it is
irrelevant that Nahmias's knowledge and conduct were imputed to
petitioner. /3/
2. Petitioner argues that the district court erred by instructing
the jury that to show its lack of consent to drug trafficking at the
building, petitioner had to establish that it had done all that
reasonably could be expected of it to prevent the illegal use of its
premises. Pet. 16-18. /4/ The court of appeals correctly upheld this
jury instruction.
The forfeiture statute, 21 U.S.C. 881(a)(7), provides for the
forfeiture of any real property that is used to commit a controlled
substance violation. The statute, however, contains an exception for
property otherwise subject to forfeiture if the owner can show that
the act giving rise to the forfeiture was "committed * * * without
(his) knowledge or consent." In construing the consent element of that
exception, the Second Circuit drew upon Calero-Toledo v. Pearson Yacht
Leasing Co., 416 U.S. 663, 689 (1974), which stated in dicta that
forfeiture of an innocent owner's property may be unconstitutional if
the owner "had done all that reasonably could be expected to prevent
the proscribed use of his property." The Second Circuit used that
standard to define the absence of consent under Section 881(a)(7),
because "it provides a balance between the two congressional purposes
of making drug trafficking prohibitively expensive for the property
owner and preserving the property of an innocent owner." Pet. App.
22a-23a.
Petitioner contends that the definition of "consent" adopted by the
Second Circuit is erroneous because it is not expressly set forth in
Section 881(a). Pet. 18. The statute does not define that term,
however, and petitioner does not offer an alternative definition.
Moreover, the Second Circuit reasonably interpreted that term in a
manner that gives effect to Congress's purposes. Finally, the
standard adopted by the court of appeals does not require a property
owner to undertake futile or dangerous efforts to curtail drug
activity; that standard only requires a party to undertake reasonable
steps toward that end.
Petitioner claims that the standard adopted by the court below
conflicts with the standard set forth in decisions of the Third and
Sixth Circuits. Pet. 17-18. The Third Circuit case, United States v.
Parcel of Real Property Known As 6109 Grubb Road, 886 F.2d 618 (1989),
clearly does not conflict with the decision below, since that court
expressly declined to consider whether a claimant asserting an
innocent owner defense must show that it did "all that reasonably
could be expected." Id. at 627. In United States v. Lots 12, 13, 14,
and 15, Keeton Heights, 869 F.2d 942, 947 (6th Cir. 1989), the court
stated that Section 881(a)(7) "imposes no requirement that a person
who claims the status of 'innocent owner' establish that he has done
all that he could reasonably be expected to do to prevent the
proscribed use of his property." According to the court, "(i)t is
enough, under the statute, that the owner establish that the
proscribed act was committed 'without the knowledge or consent of that
owner.'" 869 F.2d at 947. That statement, however, was dicta, since
the court ruled that the government had not properly put the
claimant's knowledge or consent in issue at all. Ibid. In addition,
the court of appeals evidently considered the "all that reasonably
could be expected" standard in the context of the claimant's assertion
that she fulfilled that obligation and therefore the property could
not be constitutionally forfeited, rather than in the context of an
assertion that the standard was an appropriate test for consent under
the statute. Id. at 946-947. Moreover, the Sixth Circuit did not
explain what are the elements or coutours of the consent standard.
When confronted with a case requiring a definition of the absence of
consent, the Sixth Circuit may adopt a standard that is
indistinguishable from the one adopted by the court of appeals here.
Under these circumstances, the Sixth Circuit cannot be said to have
fully considered and rejected the standard adopted by the court below.
Review of the asserted conflict between the decision below and in
Keeton Heights would therefore be premature. /5/
In any event, petitioner could not satisfy even the least demanding
definition of the term "consent." The government showed that
petitioner's agents, including its president and chief shareholder
Hersh, knew about a long-standing and virulent drug problem at their
building, but did nothing to terminate it. Instead, petitioner's
superintendent and rental agent actively sought to further the drug
trafficking in the building. Hersh ignored repeated police attempts
to enlist his aid in curtailing drug dealing in the building. Indeed,
Hersh failed to take any meaningful steps to rid the building of drug
dealers after the June 2, 1988, raid on the building. Thus, the
government here provided sufficient evidence to allow a jury
instructed under a more lenient standard to conclude that petitioner
consented to the drug trafficking. Accordingly, because petitioner
could not prevail even under the most lenient standard, its claim does
not warrant further review.
3. Petitioner contends that the initial ex parte seizure of the
West 141st Street building on June 29, 1988, violated the Due Process
Clause of the Fifth Amendment. In particular, petitioner argues that
it was entitled to notice and a hearing prior to the initial seizure
of the building. Pet. 18-21. That claim also does not warrant
further review.
The determination of the process due before a seizure of property
requires use of the balancing test set forth in Mathews v. Eldridge,
424 U.S. 319, 335 (1976). That test requires a court to evaluate
three factors: the significance of the property interest at stake;
the risk of an erroneous deprivation through the procedures used and
the probable value of additional procedural safeguards; and the
government's interest in pre-notice seizure. The court of appeals
applied that test in this case and correctly held that petitioner
received the process that was due. See Pet. App. 11a-15a.
As the court of appeals found, petitioner's purely commercial
interest in the building, although significant, is not of the same
weight as a homeowner's interest in his or her property. "An
expectation of privacy in commercial premises * * * is different from
and indeed less than, a similar expectation in an individual's home."
New York v. Burger, 482 U.S. 691, 700 (1987). Petitioner was deprived
only of the income from the property, not of the abode of any of its
owners of officers. Second, the risk of erroneous deprivation was
minimized by the probable cause hearing before the magistrate. Third,
the government had a substantial interest in seizing the building
without notice to petitioner. Prior investigation had suggested that
petitioner's employees and officers knew of and were involved in the
extensive drug trafficking in the building. In addition, the drug
trafficking at the building had survived several prior police raids,
including a search of eight apartments in the building on June 2,
1988, three weeks before the seizure of the building, that had
resulted in 26 arrests and the seizure of several weapons. Thus,
seizure of the property without notice not only was necessary to
ensure that drug trafficking at the building was finally brought to an
end, but also to help ensure the safety of the police officers
involved in the June 29 search and seizure and of innocent tenants of
the building. See Calero-Toledo v. Pearson Yacht Leasing Co., 416
U.S. at 679 (seizure without prior notice justified because seizure
prevented further illicit use of the property).
Even if petitioner were correct that it was entitled to preseizure
notice, its claim would not warrant review. Just as an illegal arrest
does not render a person immune from prosecution, e.g., New York v.
Harris, 110 S. Ct. 1640, 1643 (1990), so, too, the illegal seizure of
property does not immunize that property from forfeiture. United
States v. Premises and Real Property at 4492 S. Livonia Road, 889 F.2d
1258, 1265-1266 (2d Cir. 1989); United States v. One 1978 Mercedes
Benz, Four-Door Sedan, 711 F.2d 1297, 1302-1303 (5th Cir. 1983);
United States v. One 1975 Pontiac Le Mans, 621 F.2d 444, 450-451 (1st
Cir. 1980); United States v. One (1) 1971 Harley-Davidson Motorcycle,
508 F.2d 351 (9th Cir. 1974). See INS v. Lopez-Mendoza, 468 U.S.
1032, 1040 (1984). Petitioner had a full trial on the merits of its
claim that the government did not have the right to seize its
property. /6/ Accordingly, the legality of the seizure has been
established at a trial on the merits, and any error in the June 29,
1988, seizure without notice does not undermine the integrity of the
judgment entered at the trial. In short, as the court of appeals
concluded, "(t)he high level of ongoing narcotics trafficking in the
building, coupled with (petitioner's) opportunity to contest the
forfeiture at trial (shows) that issuance of the seizure warrant by a
neutral and detached magistrate was all the process that was due."
Pet. App. 14a-15a. Consequently, petitioner's claim does not merit
review.
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
KENNETH W. STARR
Solicitor General
ROBERT S. MUELLER, III
Assistant Attorney General
J. DOUGLAS WILSON
Attorney
JANUARY 1991
/1/ The evidence at trial is set forth in the court of appeals'
decision and the government's brief in that court.
/2/ The court also held that Section 881(a)(7) allowed the
govenment to forfeit the entire building on West 141st Street, not
just the 15 apartments connected to drug trafficking, and that so
construed the statute does not violate the Eighth Amendment
prohibition against cruel and unusual punishments. Pet. App. 24a-27a.
/3/ Petitioner also claims that the district court erred in denying
shareholder Stanley Weg's motion to intervene. Pet. 9, 14-15. The
district court denied Weg's motion on the ground that it was untimely,
however, and petitioner did not raise this issue in the court of
appeals. Accordingly, this Court should not consider petitioner's
claim. In any event, petitioner's fact-bound claim, which is
addressed to the discretion of the district court, see NAACP v. New
York, 413 U.S. 345, 366 (1973) (district court has broad discretion to
deny untimely motion to intervene), raises no issue warranting review
by this Court.
/4/ In relevant part, the district court instructed the jury as
follows, Gov't C.A. Br. 23-24 (quoting C.A. Supp. App. 491-492):
Now, one gives one's consent to something when one
voluntarily allows what is planned or done by another or when
one agrees or accepts a course of action. You must examine the
acts or any failures to act by the claimant, such as what steps
it took or might have taken to rid the property of the drug
dealers, and determine whether these can be said to constitute
the claimant's consent to the use of the premises in the illegal
manner alleged.
I instruct you that once an owner or his agent is on actual
notice of illegal conduct involving the owner's leased property
the owner has a duty to do all that reasonably could be expected
to prevent the illegal use of its premises.
It is for you to decide using your common sense what actions
would have comprised a reasonable response by a landlord in
similar circumstances. I instruct you that the claimant is not,
however, required to take vigilante or lawless actions in
connection with any drug activity on its premises or to endanger
the safety of its employees or to engage in conduct which would
be wholly futile.
/5/ Petitioner also asserts that two district court decisions
conflict with the Second Circuit's decision here. See United States
V. Premises Known As 171-02 Liberty Avenue, 710 F. Supp. 46 (E.D.N.Y.
1988); United States V. One 1981 Datsun 208ZX, 644 F. Supp. 1280
(E.D. Pa. 1986). In the Liberty Avenue case, however, the district
court found that the property owner had done everything that was
reasonable under the circumstances; it held that the additional steps
that the government argued that the owner should have taken were
unreasonable. In One Datsun 280ZX, the court found that the claimant
had done all that could be expected to prevent the illegal use of the
vehicle in question. 644 F. Supp. at 1288.
/6/ Petitioner never requested an evidentiary hearing before trial
on the merits of the seizure; nor did petitioner move to dismiss the
the forfeiture proceeding because of the illegality of the seizure.
Gov't C.A. Br. 21.